<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________________ to ______________________
Commission file number 0-15381
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 75-2083046
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
One Seaport Plaza, New York, N.Y. 10292-0128
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-3500
Securities registered pursuant to Section 12(b) of the Act:
None
- -----------------------------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Depositary Units of Limited Partnership Interest
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(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes CK No _
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [CK]
DOCUMENTS INCORPORATED BY REFERENCE
Registrant's Annual Report to Limited Partners for the year ended December
31, 1997 is incorporated by reference into Parts II and IV of this Annual Report
on Form 10-K.
Amended and Restated Certificate and Agreement of Limited Partnership,
included as part of the Registration Statement on Form S-11 (File No. 33-1213)
filed with the Securities and Exchange Commission pursuant to Rule 424(b) of the
Securities Act of 1933, as amended, is incorporated by reference into Part IV of
this Annual Report on Form 10-K.
Index to exhibits can be found on pages 8 and 9.
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I PAGE
<S> <C> <C>
Item 1 Business.......................................................................... 3
Item 2 Properties........................................................................ 4
Item 3 Legal Proceedings................................................................. 4
Item 4 Submission of Matters to a Vote of Unitholders.................................... 4
PART II
Item 5 Market for the Registrant's Units and Related Unitholder Matters.................. 4
Item 6 Selected Financial Data........................................................... 5
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations...................................................................... 5
Item 8 Financial Statements and Supplementary Data....................................... 5
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure...................................................................... 5
PART III
Item 10 Directors and Executive Officers of the Registrant................................ 5
Item 11 Executive Compensation............................................................ 7
Item 12 Security Ownership of Certain Beneficial Owners and Management.................... 7
Item 13 Certain Relationships and Related Transactions.................................... 7
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K................... 8
Financial Statements and Financial Statement Schedules............................ 8
Exhibits.......................................................................... 8
Reports on Form 8-K............................................................... 9
SIGNATURES................................................................................... 14
</TABLE>
2
<PAGE>
PART I
Item 1. Business
General
Prudential-Bache/Watson & Taylor, Ltd.-4 (the 'Registrant'), a Texas limited
partnership, was formed on October 11, 1985 and will terminate in accordance
with a vote of the Unitholders as described below. The Registrant was formed for
the purpose of acquiring, developing, owning and operating business centers,
retail shopping centers, mini-storage facilities and other similar commercial
real estate and investing in unimproved commercial properties with proceeds
raised from the initial sale of depositary units ('Units'). The Registrant's
fiscal year for book and tax purposes ends on December 31.
On December 15, 1995, the Management Committee of the Registrant determined
to seek bids for all the properties held by the Registrant. On June 13, 1996,
the Registrant entered into a contract with Public Storage, Inc., the property
manager of the Registrant's properties, for the sale of substantially all the
Registrant's properties. This sale was subject to the approval by the
Unitholders holding a majority of the depositary units and certain other
conditions and potential price adjustments.
In accordance with a consent statement dated September 17, 1996 the
Unitholders approved, on October 18, 1996, the sale to Public Storage, Inc. of
all five miniwarehouse facilities and four of the six undeveloped land parcels
owned by the Registrant and the liquidation and dissolution of the Registrant.
The five miniwarehouse facilities and three of the four undeveloped land parcels
which were under contract were sold to Public Storage, Inc. and its affiliates
on November 13, 1996. The Registrant received, in cash, gross sales proceeds of
$12,030,000 reduced by certain selling expenses and pro rations of approximately
$440,000. The gross sales price was in excess of the appraised value of the
properties. The fourth land parcel, Yancy Camp was sold to Public Storage, Inc.
on December 19, 1996. The Registrant received in cash, gross sales proceeds of
$175,000 reduced by certain selling expenses and pro rations of approximately
$7,000. The fifth land parcel, Dimension, a one-half acre of land, was sold for
$5,000 to a third party on November 22, 1996. The Registrant continues to own
the remaining undeveloped land parcel, Beltline Central, located in Addison,
Texas.
A distribution of $165 per depositary unit was made on November 26, 1996
representing substantially all of the net sales proceeds reduced by a
contingency reserve and funds required to meet the anticipated current and
future operating costs until the liquidation of the Registrant.
On March 25, 1998, the Registrant entered into an agreement to sell the
Beltline Central property to a third party buyer. The purchase price for the
property is approximately $390,000 less certain closing costs. The sale
is subject to certain contingencies, including a thirty-day due
diligence period for the buyer to evaluate the property and
complete a feasibility study, and the agreement may be terminated
in certain circumstances as defined in the agreement. There can be
no assurance as to when or whether a closing on the property will occur.
After the consummation of the proposed sale of the Beltline Central
property, the Registrant will have sold all of its real properties,
in accordance with the plan of liquidation previously approved by
the Unitholders. The Registrant will review its liabilities, set
aside amounts needed to dissolve the Registrant's liabilities
and will then liquidate the Registrant as soon as practicable
thereafter.
General Partners
The general partners of the Registrant are Prudential-Bache Properties, Inc.
('PBP'), George S. Watson and A. Starke Taylor, III (collectively, the 'General
Partners'). PBP is the Managing General Partner and is responsible for the
day-to-day operations of the Registrant and its investments. See Note E of the
financial statements in the Registrant's Annual Report which is filed as an
exhibit hereto.
3
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Employees
The Registrant has no employees. Management and administrative services for
the Registrant are performed by the General Partners and their affiliates
pursuant to the Partnership Agreement. See Note E of the financial statements in
the Registrant's Annual Report which is filed as an exhibit hereto.
Item 2. Properties
As of December 31, 1997, the Registrant has sold all of its properties except
for one undeveloped land parcel, Beltline Central, consisting of 0.77 acres
located in Addison, Texas.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Unitholders
None
PART II
Item 5. Market for the Registrant's Units and Related Unitholder Matters
As of March 5, 1998, there were 4,262 holders of record owning 66,555 Units.
A significant secondary market for the Units has not developed, and it is not
expected that one will develop in the future. There are also certain
restrictions set forth in Section 18.2 of the Partnership Agreement limiting the
ability of a Unitholder to transfer Units. Consequently, holders of Units may
not be able to liquidate their investments in the event of an emergency or for
any other reason.
The following per Unit cash distributions were paid to Unitholders on or
about 45 days after the end of the specified quarter and were made from current
and previously undistributed cash generated by the operations of the
Registrant's properties:
<TABLE>
<CAPTION>
Quarter Ended 1997 1996
------------------------------------ ----- -----
<S> <C> <C>
March 31 $ -- $1.25
June 30 -- 1.25
September 30 -- --
December 31 -- --
</TABLE>
A distribution of $9.75 per limited partnership unit was made in February
1996 representing all the net proceeds from the sale of the 150th and Black Bob
property, an undeveloped land parcel.
In addition, a distribution of $165 per limited partnership unit was made on
November 26, 1996 representing substantially all of the net proceeds from the
sale of substantially all the Registrant's properties, reduced by a contingency
reserve and funds required to meet the anticipated current and future operating
costs until the liquidation of the Registrant. The Registrant intends to sell
its remaining land parcel and liquidate in 1998 and will distribute any
remaining funds at such time.
4
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Item 6. Selected Financial Data
The following table presents selected financial data of the Registrant. This
data should be read in conjunction with the financial statements of the
Registrant and the notes thereto on pages 2 through 8 of the Registrant's Annual
Report which is filed as an exhibit hereto.
<TABLE>
<CAPTION>
Nine Months*
Ended Year ended December 31,
September 30, ---------------------------------------
1996 1995 1994 1993
------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Total revenues $ 1,458,001 $ 2,027,520 $ 1,938,381 $ 1,787,959
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------
Provisions for loss on impairment
of assets $ 300,000 $ 900,000 $ -- $ 800,000
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------
Net income (loss) $ (121,250) $ (717,009) $ 276,355 $ (667,213)
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------
Unitholder income (loss) per Unit $ (1.99) $ (11.51) $ 3.17 $ (10.75)
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------
Total assets $12,760,473 $13,635,938 $14,858,287 $15,616,124
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------
Total distributions $ 988,370 $ 633,475 $ 805,171 $ 669,167
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------
Unitholder distributions per Unit $ 14.44 $ 8.76 $ 11.13 $ 9.25
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------
</TABLE>
* As of October 1, 1996, the Partnership adopted the liquidation basis of
accounting in accordance with generally accepted accounting principles and,
therefore, there is no reporting of results of operations for the three months
ended December 31, 1996 and for the year ended December 31, 1997. Total assets
at December 31, 1996 and 1997 were $1,834,327 and $1,400,303, respectively
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This information is incorporated by reference to page 9 of the Registrant's
Annual Report which is filed as an exhibit hereto.
Item 8. Financial Statements and Supplementary Data
The financial statements are incorporated by reference to pages 2 through 8
of the Registrant's Annual Report which is filed as an exhibit hereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
There are no directors or executive officers of the Registrant. The
Registrant is managed by the Managing General Partner.
Section 16(a) Beneficial Ownership Reporting Compliance
The Registrant, the Registrant's General Partners, PBP's directors and
executive officers and any persons holding more than ten percent of the
Registrant's Units are required to report their initial ownership of such Units
and any subsequent changes in that ownership to the Securities and Exchange
Commission on Forms 3, 4 and 5. Such General Partners, executive officers,
directors and other persons who own greater than ten percent of the Registrant's
Units are required by Securities and Exchange Commission regulations to furnish
the Registrant with copies of all Forms 3, 4 or 5 they file. All of these filing
requirements were satisfied on a timely basis. In making these disclosures, the
Registrant has relied solely on written representations of the General Partners,
PBP's directors and executive officers and other persons who own greater
5
<PAGE>
<PAGE>
than ten percent of the Registrant's Units or copies of the reports they have
filed with the Securities and Exchange Commission during and with respect to its
most recent fiscal year.
Prudential-Bache Properties, Inc., Managing General Partner
The directors and executive officers of PBP and their positions with regard
to managing the Registrant are as follows:
Name Position
Brian J. Martin President, Chief Executive Officer,
Chairman of the Board of Directors
and Director
Barbara J. Brooks Vice President--Finance and Chief
Financial Officer
Eugene D. Burak Vice President and Chief Accounting Officer
Frank W. Giordano Director
Nathalie P. Maio Director
BRIAN J. MARTIN, age 47, is the President, Chief Executive Officer, Chairman
of the Board of Directors and a Director of PBP. He is a Senior Vice President
of Prudential Securities Incorporated ('PSI'), an affiliate of PBP. Mr. Martin
also serves in various capacities for certain other affiliated companies. Mr.
Martin joined PSI in 1980. Mr. Martin is a member of the Pennsylvania Bar.
BARBARA J. BROOKS, age 49, is the Vice President--Finance and Chief Financial
Officer of PBP. She is a Senior Vice President of PSI. Ms. Brooks also serves in
various capacities for other affiliated companies. She has held several
positions within PSI since 1983. Ms. Brooks is a certified public accountant.
EUGENE D. BURAK, age 52, is a Vice President of PBP. He is a First Vice
President of PSI. Prior to joining PSI in September 1995, he was a management
consultant for three years and was with Equitable Capital Management Corporation
from March 1990 to May 1992. Mr. Burak is a certified public accountant.
FRANK W. GIORDANO, age 55, is a Director of PBP. He is a Senior Vice
President of PSI and an Executive Vice President and General Counsel of
Prudential Mutual Fund Management, LLC, an affiliate of PSI. Mr. Giordano also
serves in various capacities for other affiliated companies. He has been with
PSI since July 1967.
NATHALIE P. MAIO, age 47, is a Director of PBP. She is a Senior Vice
President and Deputy General Counsel of PSI and supervises non-litigation legal
work for PSI. She joined PSI's Law Department in 1983; presently, she also
serves in various capacities for other affiliated companies.
Thomas F. Lynch, III ceased to serve as President, Chief Executive Officer,
Chairman of the Board of Directors and a Director of Prudential-Bache
Properties, Inc. effective May 2, 1997. Effective May 2, 1997, Brian J. Martin
was elected President, Chief Executive Officer, Chairman of the Board of
Directors and a Director of Prudential-Bache Properties, Inc.
There are no family relationships among any of the foregoing directors or
executive officers. All of the foregoing directors and executive officers have
indefinite terms.
Individual General Partners
GEORGE S. WATSON, age 57, is a financial specialist and a certified public
accountant. He has been instrumental in the success of The Community Minority
Business Advancement Program sponsored by the University of Texas at Austin
College and Graduate Schools of Business. Mr. Watson is a member of the Advisory
Council of the University of Texas at Austin Business School and a member of its
Chancellor's Council. Mr. Watson attended the University of Texas at Austin,
graduating summa cum laude in 1963 with a BBA in accounting and finance. He
received his MBA in accounting and finance from the University of Texas in 1965,
graduating first in his class and summa cum laude. He also has received various
awards and scholarships and is a member of many fraternal organizations
including Phi Kappa Phi, the honorary scholastic society. Mr. Watson has over 25
years of experience in real estate and financial investments.
6
<PAGE>
<PAGE>
A. STARKE TAYLOR, III, age 54, holds a bachelor of business administration
degree from Southern Methodist University which was awarded in 1966. He is past
president of the North Dallas Chamber of Commerce. Mr. Taylor is a member of the
boards of the Dallas Theological Seminary and the Northeast Texas Regional Board
of Young Life. He is president of Sovereign Corporation, a business investment
and finance organization. Mr. Taylor has over 25 years of experience in real
estate, insurance and financial investments.
The two individual General Partners are not related.
Item 11. Executive Compensation
The Registrant does not pay or accrue any fees, salaries or any other form of
compensation to either individual General Partner or to directors and officers
of the Managing General Partner for their services. Certain officers and
directors of the Managing General Partner receive compensation from affiliates
of the Managing General Partner, not from the Registrant, for services performed
for various affiliated entities, which may include services performed for the
Registrant; however, the Managing General Partner believes that any compensation
attributable to services performed for the Registrant is immaterial. See also
Item 13 Certain Relationships and Related Transactions for information regarding
reimbursement to the General Partners for services provided to the Registrant.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 5, 1998, no individual General Partner or director or officer of
the Managing General Partner owns directly or beneficially any interest in the
voting securities of the Managing General Partner.
As of March 5, 1998, no individual General Partner or director or officer of
the Managing General Partner owns directly or beneficially any of the Units
issued by the Registrant.
As of March 5, 1998, no limited partner beneficially owns more than five
percent (5%) of the outstanding Units issued by the Registrant.
Item 13. Certain Relationships and Related Transactions
The Registrant has and will continue to have certain relationships with the
General Partners and their affiliates. However, there have been no direct
financial transactions between the Registrant and the individual General
Partners or the directors or officers of the Managing General Partner during
1997.
Reference is made to Notes A and E of the financial statements in the
Registrant's Annual Report which is filed as an exhibit hereto, which identify
the related parties and discuss the services provided by these parties and the
amounts paid or payable for their services.
7
<PAGE>
PART IV
<TABLE>
<CAPTION>
Page
Number in
Annual Report
<S> <C> <C> <C>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements and Report of Independent Auditors--incorporated
by reference to the Registrant's Annual Report which is filed as an
exhibit hereto
Report of Independent Auditors 2
Financial Statements:
Statements of Net Assets--December 31, 1997 and 1996 3
Statements of Changes in Net Assets--Year ended December 31, 1997 and
three months ended December 31, 1996 3
Statements of Operations--Nine months ended September 30, 1996 and
year ended December 31, 1995 4
Statements of Changes in Partners' Capital--Nine months ended
September 30, 1996 and year ended December 31, 1995 4
Statements of Cash Flows--Nine months ended September 30, 1996 and
year ended December 31, 1995 5
Notes to Financial Statements 6
2. Financial Statement Schedules and Consent of Independent Auditors
Consent of Independent Auditors
Schedules:
II-- Valuation and Qualifying Accounts and Reserves--Three years
ended December 31, 1997
III--Real Estate and Accumulated Depreciation at December 31, 1997
Notes to Schedule III--Real Estate and Accumulated Depreciation
All other schedules have been omitted because they are not applicable
or the required information is included in the financial statements
and the notes thereto.
3. Exhibits
Description:
2.01 Consent Statement dated September 17, 1996 (1)
3.01 Amended and Restated Certificate and Agreement of Limited Partnership
(2)
3.02 Amendment Number 10 to the Amended and Restated Certificate and
Agreement of Limited Partnership (3)
4.01 Certificate of Limited Partnership Interest (2)
4.02 Depositary Receipt (2)
10.01 Management Agreement (2)
10.02 Depositary Agreement (2)
10.03 Agreement Relating to General Partner Interests (2)
10.04 Sales Contract dated March 25, 1998 by and between the Registrant and
Dimex Beltline, LLC, a Texas limited liability company (filed
herewith)
</TABLE>
8
<PAGE>
<TABLE>
<S> <C> <C> <C>
13.01 Registrant's Annual Report to Unitholders for the year ended December
31, 1997 (with the exception of the information and data incorporated
by reference in Items 7 and 8 of this Annual Report on Form 10-K, no
other information or data appearing in the Registrant's Annual Report
is to be deemed filed as part of this report)
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K--None
</TABLE>
- ------------------
(1) Filed on the Registrant's Proxy Statement on Schedule 14A and incorporated
herein by reference.
(2) Filed as an exhibit to Registration Statement on Form S-11 (No. 33-1213) and
incorporated herein by reference.
(3) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1991 and incorporated herein by reference.
9
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CONSENT OF INDEPENDENT AUDITORS
To the Partners
Prudential-Bache/Watson & Taylor, Ltd.-4
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Prudential-Bache/Watson & Taylor, Ltd.-4 of our report dated February 18,
1998, except for Note G as to which the date is March 25, 1998, included in the
1997 Annual Report to Limited Partners of Prudential-Bache/Watson & Taylor,
Ltd.-4.
Our report also included the financial statement schedules of
Prudential-Bache/Watson & Taylor, Ltd.-4 listed in Item 14(a). These schedules
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion based on our audits. In our opinion, the financial statement
schedules referred to above, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
/s/ Ernst & Young LLP
New York, New York
March 30, 1998
10
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Allowance for Loss on Impairment of Assets
Deductions - Amounts
Year Ended Balance at Additions - Amounts Written-off During Balance at
December 31, Beginning of Year Reserved During Year Year End of Year
- ------------- ----------------- -------------------- ---------------------- -------------
<S> <C> <C> <C> <C>
1995(1) $ 8,142,000 900,000 -- $ 9,042,000
1996(1) $ 9,042,000 300,000 (9,261,210)(2) $ 80,790 (3)
1997(1) $ 80,790 125,000 -- $ 205,790 (3)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Registrant's properties were valued at the lower of the carrying amount
or estimated fair value less costs to sell. As a result, a provision for
loss on impairment of assets of $900,000, $300,000 and $125,000 was recorded
for the years ended December 31, 1995, 1996 and 1997, respectively.
(2) Applicable to property which was sold during the year.
(3) Shown as a direct deduction of carrying value of property held for sale.
11
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PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1997
<TABLE>
<CAPTION>
Initial cost to Amount at which carried at
Registrant close of year
(Note B) Costs -----------------------------------------------
---------------------------- capitalized Permanent
Buildings subsequent Buildings writedown of
and to and impaired assets
Description (Note A) Land improvements acquisition Land improvements (Notes C & D)
<S> <C> <C> <C> <C> <C> <C>
- --------------------------- ----------- ------------ ------------ ---------- ------------ ---------------
UNIMPROVED PROPERTY
Beltline Central
(Addison, TX) $ 505,790 $ -- -- $ 505,790 $ -- $ 205,790
----------- ------------ ------------ ---------- ------------ ---------------
----------- ------------ ------------ ---------- ------------ ---------------
- --------------------------------------------------------------------------------------------------------------------------------
See notes on the following page
<CAPTION>
Total Date
Description (Note A) (Note C) acquired
<S> <C> <C>
- --------------------------- -------- --------
UNIMPROVED PROPERTY
Beltline Central
(Addison, TX) $300,000 1986
--------
--------
- -----------------------------------------------------------
</TABLE>
12
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
NOTES TO SCHEDULE III
December 31, 1997
NOTE A--There are no mortgages, deeds of trust or similar encumbrances against
the remaining property.
NOTE B--Initial cost represents the initial purchase price of the property
including acquisition fees.
<TABLE>
<CAPTION>
NOTE C--RECONCILIATION SUMMARY OF TRANSACTIONS--REAL ESTATE OWNED
<S> <C> <C> <C>
Year ended December 31,
---------------------------------------
1997 1996 1995
--------- ----------- -----------
Balance at beginning of year...................... $ 425,000 $27,042,522 $27,616,465
Allocation of accumulated depreciation
against the carrying amount of the
properties based upon the reclassification
of the properties as held for sale.............. -- (5,823,784) --
Allocation of allowance for loss on impairment
of assets against the carrying amount of the
properties based upon the reclassification of
the properties as held for sale (2)............. (125,000) (9,342,000) --
Additions during year-property improvements....... -- 160,214 136,241
Deductions during year-costs of properties sold
(1)............................................. -- (11,611,952) (710,184)
--------- ----------- -----------
Balance at close of year.......................... $ 300,000 $ 425,000 $27,042,522
--------- ----------- -----------
--------- ----------- -----------
(1) In December 1995, the Registrant sold the 150th & Black Bob property, an undeveloped
land parcel. In November and December 1996, the Registrant sold all of its remaining
properties except for Beltline Central, an undeveloped land parcel.
(2) During 1997, an allowance for loss on impairment of assets of $125,000 was provided
for. During 1996, an allowance for loss on impairment of assets of $300,000 was provided
for, bringing the total allowance on the above assets to $9,342,000. See Note C to the
financial statements of the Registrant's Annual Report filed as an exhibit hereto.
The aggregate cost of land for Federal income tax purposes as of December 31, 1997 was
$596,168.
NOTE D--RECONCILIATION SUMMARY OF TRANSACTIONS--ACCUMULATED DEPRECIATION
<CAPTION>
Year ended December 31,
---------------------------------------
1997 1996 1995
--------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at beginning of year...................... $ -- $ 5,823,784 $ 5,233,140
Depreciation during the year charged to
expense......................................... -- -- 590,644
Allocation of accumulated depreciation against the
carrying amount of the properties based upon the
reclassification of the properties as held for
sale............................................ -- (5,823,784) --
--------- ----------- -----------
Balance at close of year.......................... $ -- $ -- $ 5,823,784
--------- ----------- -----------
--------- ----------- -----------
The Partnership ceased depreciating the properties for financial reporting purposes when
the properties were reclassified as held for sale as of December 31, 1995.
</TABLE>
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Prudential-Bache/Watson & Taylor, Ltd.-4
By: Prudential-Bache Properties, Inc.,
A Delaware corporation,
Managing General Partner
By: /s/ Eugene D. Burak Date: March 31, 1998
----------------------------------------
Eugene D. Burak
Vice President and
Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities (with respect to the General Partner) and on
the dates indicated.
By: Prudential-Bache Properties, Inc.,
A Delaware corporation,
Managing General Partner
By: /s/ Brian J. Martin Date: March 31, 1998
-----------------------------------------
Brian J. Martin
President, Chief Executive Officer,
Chairman of the Board of Directors and Director
By: /s/ Barbara J. Brooks Date: March 31, 1998
-----------------------------------------
Barbara J. Brooks
Vice President-Finance and
Chief Financial Officer
By: /s/ Eugene D. Burak Date: March 31, 1998
-----------------------------------------
Eugene D. Burak
Vice President
By: /s/ Frank W. Giordano Date: March 31, 1998
-----------------------------------------
Frank W. Giordano
Director
By: /s/ Nathalie P. Maio Date: March 31, 1998
-----------------------------------------
Nathalie P. Maio
Director
14
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Prudential-Bache/Watson & Taylor, Ltd. - 4
THIS CONTRACT, made as of March 25, 1998, by and
between Prudential-Bache/Watson & Taylor, Ltd. - 4, a
Texas limited partnership ("Seller"), and Dimex
Beltline, LLC, a Texas limited liability company
("Buyer").
WITNESSETH:
WHEREAS, Seller desires to sell and Buyer desires to
purchase all of Seller's right, title and interest in
the 0.7662 Acre Tract of Land (33,376 square feet.)
located on the north side of Belt Line Road,
approximately 180 feet east of Surveyor Boulevard,
Addison, Dallas County, Texas and any improvements
presently existing and located thereon ("Property"),
all upon the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, following such sale, Seller intends to
liquidate and distribute its net assets (including the
proceeds of such sale) to its partners.
NOW, THEREFORE, in consideration of the foregoing, the
sum of $1.00 by each party in hand paid to the other,
and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound, do
hereby mutually agree as follows:
1. Agreement to Purchase and Sell. Subject to the terms
and conditions hereinafter set forth, Seller agrees to
sell to Buyer and Buyer agrees to purchase from Seller,
free and clear of all liens, claims, encumbrances and
other charges, except the Permitted Exceptions (as
hereinafter defined), all of Seller's right, title and
interest in and to the Property.
2. Purchase Price. The purchase price ("Purchase Price")
for the Property, which Buyer agrees to pay, is the sum
of $392,168 payable in full in cash or other
immediately available funds.
3. Evidence of Title.
(a) Seller shall convey to Buyer at Closing (as
hereinafter defined) good, valid, insurable fee
simple title to the Property, subject to any and all
covenants, conditions, rights of way, restrictions,
easements and other matters affecting title, which do
not materially impair the use or the value of the
Property (collectively, "Permitted Exceptions").
(b) Buyer shall obtain within twenty (20) days after
the date hereof, commitment for an ALTA policy of
owners title insurance or the equivalent thereof in
the Texas jurisdiction ("Title Commitment") issued by
a reputable title insurance company agreed upon by
Seller and Buyer ("Title Insurer") showing fee simple
title to the Property as vested in Seller and to be
vested in Buyer, subject to the Permitted Exceptions.
Within ten days after the delivery of the Title
Commitment, Buyer shall deliver to Seller written
notice setting forth its
<PAGE>
objections to any matters
encumbering the Property other than the Permitted
Exceptions ("Defects"). Seller shall then have the
option to cure any or all of the Defects prior to
Closing or terminate this Contract. Notwithstanding
anything herein to the contrary, Seller shall have
the right to adjourn the Closing Date for such
reasonable period, not to exceed thirty days, as
shall be necessary to cure any such Defect.
4. Condition of the Property. Subject only to Seller's
covenants, representations and warranties in this
Contract, Buyer shall purchase the Property in its "AS
IS" condition at the Closing Date, subject to all
latent and patent defects (whether physical, financial
or legal, including title defects), based solely on
Buyer's own inspection, analysis and evaluation of the
Property and not in reliance on any records or other
information obtained from Seller or on Seller's behalf.
Buyer acknowledges that it is not relying on any
statement or representation (other than any
representations, warranties, covenants and
indemnifications contained in this Contract) that has
been made or that in the future may be made by Seller
or any of Seller's employees, agents, attorneys or
representatives concerning the condition of the
Property (whether relating to physical conditions,
operating performance, title, or legal matters).
Without limiting the foregoing, any information
disclosed in writing to Buyer in connection with any
investigations, inspections, tests or analyses
performed prior to Closing, shall be deemed acceptable
to Buyer, and not violative of any warranty or
representation of Seller, if Buyer proceeds to Closing
hereunder.
5. Due Diligence Contingency. Buyer shall have a period
of thirty (30) days after the date hereof ("Due
Diligence Period") to perform environmental evaluations
and zoning, building and feasibility studies. This
contingency shall be deemed satisfied unless Buyer
notifies Seller of an unsatisfactory condition on or
before thirty (30) days from the date hereof. In the
event that Buyer notifies Seller of an unsatisfactory
condition within such time period, this Contract shall
terminate and neither party hereto shall have any
further liability to the other hereunder. In no event
shall Seller have any obligation to take any action
with respect to any such unsatisfactory condition or to
grant any reduction in the purchase price in connection
therewith. Buyer's sole option is to terminate this
Contract prior to the expiration of the Due Diligence
Period or to proceed with the purchase of the Property
in accordance herewith.
6. Closing. Upon the terms and subject to the conditions
of this Contract, the transfer of title and possession
of the Property ("Closing") shall be held as a closing
by mail at the offices of Buyer unless otherwise
agreed in writing, at 10:00 a.m., Dallas time, on the
date which is two (2) business days after all of the
conditions to Closing as set forth in Sections 7, 8 and
9 hereof have been satisfied. The date on which the
Closing occurs is herein called the "Closing Date".
7. Conditions to Seller's and Buyer's Obligation to
Close. The obligations of Seller and Buyer to close
under this Contract are subject to the fulfillment,
prior to or at Closing, of the following condition:
There shall not be in effect any statute, regulation,
order, decree or judgment of any governmental entity
having jurisdiction which renders illegal or enjoins
or prevents in any material respect the sale of the
Property to Buyer.
2
<PAGE>
8. Conditions to Seller's Obligation to Close. The
obligations of Seller to close under this Contract are
subject to the fulfillment, prior to or at Closing, of
each of the following:
(a) The representations and warranties of Buyer
shall have been true and correct in all material
respects when made and shall be true and correct in
all material respects as of the Closing Date, as if
made at and as of such date except as otherwise
expressly provided herein.
(b) On and as of the Closing Date, Buyer shall have
performed and complied with, in all material
respects, all agreements and covenants required by
this Contract to be performed or complied with prior
to or on the Closing Date.
9. Conditions to Buyer's Obligation to Close. The
obligations of Buyer to close under this Contract are
subject to the fulfillment, prior to or at Closing, of
each of the following:
(a) The representations and warranties of Seller
shall have been true and correct in all material
respects when made and shall be true and correct in
all material respects as of the Closing Date, as if
made at and as of such date except as otherwise
expressly provided herein.
(b) On and as of the Closing Date, Seller shall have
performed and complied with, in all material
respects, all agreements and covenants required by
this Contract to be performed or complied with prior
to or on the Closing Date.
10. Deliveries.
(a) Seller's Deliveries. Upon the terms and subject to
the conditions of this Contract, on the Closing Date,
Seller shall:
(i) convey the Property to Buyer by delivery of a
quit claim deed or deed without covenants if a quit
claim deed cannot be utilized in a jurisdiction
where the Property is located; and
(ii) provide such evidence of its authority to sell
and convey the Property as the Title Insurer may
reasonably require.
(b) Buyer's Deliveries. Upon the terms and subject to
the conditions of this Contract, on the Closing Date,
Buyer shall deliver the following:
(i) certificates and resolutions demonstrating the
authority of the persons executing documents at
Closing; and
3
<PAGE>
(ii) Purchase Price by wire transfer of immediately
available funds to Seller's account, pursuant to
Seller's instructions.
11. Proration Items. The following shall be
apportioned on a per diem basis as of midnight of the
day preceding the Closing Date ("Adjustment Date") and
adjusted between the parties on the basis of a thirty
day month:
Real estate and other taxes, assessments and charges,
and other municipal and state charges, license and
permit fees, water and sewer rents and charges, if
any, on the basis of the fiscal period for which
assessed or charged.
Seller will not assign to Buyer any of the hazard
insurance policies affecting the Property then in
force. There will therefore be no proration of
insurance costs at Closing. Except as may be otherwise
provided therein, all other expenses which are
attributable to the period prior to the Closing Date
shall be the obligation of Seller and those which are
attributable to the period from and after the Closing
Date shall be the obligation of Buyer.
For purposes of the foregoing apportionments and
adjustments, the following procedures shall govern:
(a) If the Closing Date shall occur before the real
estate tax rate is fixed, the apportionment of such
taxes shall be made upon the basis of the tax rate
for the immediately preceding year, applied to the
latest assessed valuation.
(b) All taxes, water and sewer charges and
assessments for public improvements which are liens
upon the Property as of the Closing Date, will be
allowed to Buyer as a credit against the Purchase
Price, subject to apportionment as herein provided,
and the existence of any such lien shall not
constitute an objection to title.
12. Survey, Transfer Taxes and Other Costs. Seller
shall reimburse Buyer on the Closing Date one-half the
cost of any survey and the premium for any title
insurance, up to a maximum aggregate cost of $2,500.
All other costs of closing shall be the responsibility
of Buyer, except that, other than as expressly provided
herein, each of the parties shall pay for any and all
costs which it may incur in connection with the
transactions contemplated herein, including each
party's legal fees in connection with the Contract and
the Closing.
13. Representations and Warranties of Seller. As an
inducement for Buyer to purchase the Property from
Seller, Seller represents and warrants to Buyer the
following:
(a) Title to Real Estate. Seller has good, valid and
insurable title to the Property together with any
improvements situated thereon subject to the
Permitted Exceptions.
4
<PAGE>
(b) Organization and Authority.
(i) Seller is duly organized.
(ii) Seller has the requisite power and authority to
execute, deliver and perform this Contract. The
execution, delivery and performance of this
Contract and the consummation of the transactions
contemplated hereby have been duly authorized by
all necessary partnership action on the part of
Seller. This Contract is a valid and binding
obligation of Seller, enforceable against Seller in
accordance with its terms.
(iii) Neither the execution and delivery of this
Contract nor the consummation of the transactions
contemplated hereby in the manner herein provided
nor the fulfillment of or compliance with the terms
and conditions hereof shall:
A. contravene any material provision of the
Seller's Partnership Agreement; or
B. violate, be in conflict with, constitute a
default under, cause the acceleration of any
payments pursuant to, or otherwise impair the
good standing, validity, or effectiveness of any
agreement, contract, indenture, lease, or
mortgage, or subject any property or assets of
Seller to any indenture, mortgage, contract,
commitment, or agreement other than this Contract
to which Seller is a party or by which Seller is
bound, which in the aggregate would have a
material adverse effect on the Property.
14. Representations and Warranties of Buyer. As an
inducement for Seller to sell the Property to Buyer,
Buyer represents to Seller the following:
(a) Organization and Authority.
(i) Buyer is a Texas limited liability company duly
organized and validly existing under the laws of
the State of Texas and has full power and authority
to carry on its business as it is now being
conducted.
(ii) Buyer has the requisite power and authority to
execute, deliver and perform this Contract. The
execution, delivery and performance of this
Contract and the consummation of the transactions
contemplated hereby have been duly authorized by
all necessary action on the part of Buyer. This
Contract is a valid and binding obligation of
Buyer, enforceable against Buyer in accordance with
its terms.
(iii) Neither the execution and delivery of this
Contract nor the consummation of the transactions
contemplated hereby in the manner herein provided
nor the fulfillment of or compliance with the terms
and conditions hereof shall:
A. contravene any material provision of the
Articles of Organization or Operating Agreement
of Buyer; or
5
<PAGE>
B. violate, be in conflict with, constitute a
default under, cause the acceleration of any
payments pursuant to, or otherwise impair the
good standing, validity, or effectiveness of any
agreement, contract, indenture, lease, or
mortgage, or subject any property or assets of
Buyer to any indenture, mortgage, contract,
commitment, or agreement to which Buyer is a
party or by which Buyer is bound which, in the
aggregate, would have a material adverse effect
on Buyer's ability to perform all of its
obligations hereunder.
(b) Adequate Funds. Buyer has adequate funds or
available credit resources to pay the Purchase Price
at the Closing as provided hereunder.
15. Default and Damages.
(a) Buyer's Remedies. If Buyer shall elect to proceed
with the performance of this Contract notwithstanding
the failure to be satisfied of any conditions to
Closing, Buyer shall be deemed to have waived the
requirement that those conditions be satisfied.
Notwithstanding anything contained herein, in no
event shall Seller's general partners or limited
partners, affiliates, representatives, attorneys,
agents or employees have any personal liability under
this Contract whatsoever.
(b) Seller's Remedies. If Buyer shall be unable or
unwilling to consummate the Closing hereunder in
violation of the terms hereof, Seller shall have the
right to
(i) terminate this Contract, whereupon this Contract
shall become null and void and neither Buyer nor
Seller shall have any rights hereunder; or
(ii) pursue such rights and remedies as Seller may
have at law or in equity.
16. Brokers. Seller and Buyer hereby agree to defend
and hold the other harmless from any claim by a broker
or finder for a fee or expense which is based in any
way on an agreement or understanding made or alleged to
have been made by such broker or finder with them
relating to the transaction contemplated by this
Contract.
The provisions of this Section 16 shall survive the
Closing.
17. Indemnification of Seller. Buyer agrees to
indemnify and hold harmless Seller and its general
partners and limited partners, their affiliates, their
and their affiliates' representatives, attorneys,
accountants, agents and employees and their and their
affiliates' heirs, successors and assigns, from and
against any claims or demands for any expense,
obligation, loss, cost, damage or injury arising out of
(a) the Buyer's inspection of the Property prior to or
on the Closing Date and (b) the Buyer's operation and
maintenance of the Property from and after the Closing
Date.
The provisions of this Section 17 shall survive the
Closing.
6
<PAGE>
18. Survival of Representations, Warranties and
Indemnifications. Except as otherwise expressly set
forth herein, none of the representations, warranties
and indemnifications contained in this Contract shall
survive the Closing.
19. Reasonable Efforts. Each party hereto will use all
reasonable efforts to perform all acts required to
consummate the transactions contemplated hereby as
promptly as practicable.
20. Termination. Notwithstanding anything contained
herein, this Contract may be terminated in accordance
with Section 3(b) or Section 5 hereof or as follows:
(a) By Seller in accordance with Section 15(b) hereof.
(b) By Seller or Buyer, if a court of competent
jurisdiction issues a binding and final order
permanently preventing the sale of the Property to
Buyer, or delaying the Closing beyond ninety (90)
days after the date hereof.
(c) By Seller or Buyer, if the Closing does not occur
on or before ninety (90) days from the execution
hereof, provided that the party seeking to terminate
is not in material breach of this Contract.
In the event this Contract is terminated pursuant to
any of the foregoing provisions, this Contract shall
thereupon become null and void and neither Seller nor
Buyer nor any of their representatives shall have any
further rights or obligations hereunder.
21. Notices. Any notice which may be required or may be
desired to be given pursuant to this Contract shall be
in writing and shall be deemed delivered and effective
upon actual receipt at the following addresses or such
other addresses as the parties may notify each other by
similar notice:
If to Seller, to:
Prudential-Bache/Watson & Taylor, Ltd. - 4
c/o Prudential-Bache Properties, Inc.
One Seaport Plaza
199 Water Street - 28th Floor
New York, New York 10292-0128
Attn: Brian J. Martin
7
<PAGE>
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attn: Jay Sobel, Esq.
If to Buyer, to:
Feltman, Karesh, Major & Farbman
152 West 57th Street
New York, NY 10019
Attn: Arthur B. Malman, Esq.
22. General.
(a) Interpretation of Words. A masculine pronoun
wherever used herein shall be construed to include
the feminine or neuter where appropriate. The
singular form wherever used herein shall be construed
to include the plural where appropriate.
(b) Assignment; Successors and Assigns; Third Party
Beneficiaries.
(ii) Neither of the parties hereto may assign its
respective rights under this Contract without the
consent of the other party. The foregoing
notwithstanding, Buyer shall be permitted, upon
five days notice to Seller, to assign its rights
under this Contract to a wholly-owned subsidiary of
Buyer. Such assignment, however, shall not relieve
Buyer of, and Buyer shall remain liable for, all of
its obligations contained in this Contract.
(ii) Except as otherwise provided hereby, the
provisions of this Contract shall be binding upon
and inure to the benefit of the parties hereto and
their respective legal representatives and
successors in interest.
(iii) This Contract is not intended, nor shall it be
construed, to confer upon any party except the
parties hereto and their heirs, successors and
permitted assigns any rights or remedies under or
by reason of this Contract.
(c) Time of the Essence. Time shall be of the essence
with respect to the performance of all of the
obligations hereunder.
(d) Entire Contract. This Contract represents the
entire understanding between the parties with respect
to the subject matter hereof, superseding all prior
or contemporaneous understandings or communications
of any kind, whether written or oral. Buyer and
Seller represent that no other agreements or
arrangements exist between the Buyer and the Seller
or any of its general partners or their affiliates
with respect to the Property. This Contract may only
be modified by a written agreement signed by both
parties hereto.
8
<PAGE>
(e) Captions. The headings of the paragraphs herein are
for convenience only; they form no part of this
Contract and shall not affect its interpretation.
(f) Governing Law. The provisions of this Contract
shall be governed by and construed in accordance with
the laws of the State of New York applicable to
agreements entered into and to be performed wholly
therein.
(g) Counterparts. This Contract may be executed in
several counterparts, each of which shall be deemed
an original. Such counterparts constitute but one and
the same instrument, which may be sufficiently
evidenced by one counterpart.
(h) Further Assurances. Each of the parties hereto
shall, at the request of the other party, execute,
acknowledge and deliver any further instruments, and
take such further actions, as the requesting party
may reasonably request, to carry out effectively the
intent of this Contract.
(i) Recording. Buyer agrees not to record this
Contract.
IN WITNESS WHEREOF, the parties hereto have executed
this Contract as of the day and year first above
written.
Seller: Buyer:
Prudential-Bache/Watson &
Taylor , Ltd. - 4 Dimex Beltline, LLC
By: Prudential-Bache Properties, Inc. By: /s/ Arthur B. Malman
_________________________________ ______________________
Its Managing General Partner Arthur B. Malman
Manager
By: /s/ Brian J. Martin
_________________________________
Brian J. Martin
President
9
<PAGE>
1997
- --------------------------------------------------------------------------------
Prudential-Bache/ Annual
Watson & Taylor, Ltd.-4 Report
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
1997 Annual Report
1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Partners
Prudential-Bache/Watson & Taylor, Ltd.-4
We have audited the accompanying statements of net assets in process of
liquidation of Prudential-Bache/Watson & Taylor, Ltd.-4 as of
December 31, 1997 and 1996, and the related statements of changes
in net assets in process of liquidation for the year ended
December 31, 1997 and for the three months ended December 31,
1996. In addition, we have audited the accompanying statements of operations,
changes in partners' capital, and cash flows for the nine months ended September
30, 1996 and the year ended December 31, 1995. Our audit also included the
financial statement schedules listed in the Index at Item 14(a). These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in process of liquidation of
Prudential-Bache/Watson & Taylor, Ltd.-4 as of December 31, 1997 and 1996, the
changes in its net assets in process of liquidation for the year ended December
31, 1997 and for the three months ended December 31, 1996, and the results of
its operations and cash flows for the nine months ended September 30, 1996 and
the year ended December 31, 1995, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements taken
as a whole, present fairly, in all material respects the financial information
set forth therein.
As discussed in Note B to the financial statements, the Partnership adopted the
liquidation basis of accounting on October 1, 1996.
/s/ Ernst & Young LLP
New York, New York
February 18, 1998, except for Note G
as to which the date is March 25, 1998
2
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(limited partnership)
STATEMENTS OF NET ASSETS
(in process of liquidation)
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 1,100,303 $ 1,409,327
Property held for sale 300,000 425,000
----------- -----------
Total assets 1,400,303 1,834,327
----------- -----------
LIABILITIES
Estimated liquidation costs 170,975 226,000
Other liabilities -- 130,796
Due to affiliates, net -- 44,287
----------- -----------
Total liabilities 170,975 401,083
----------- -----------
Net assets available to limited and general partners $ 1,229,328 $ 1,433,244
----------- -----------
----------- -----------
Depositary units issued and outstanding 66,555 66,555
----------- -----------
----------- -----------
- --------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
(in process of liquidation)
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNERS TOTAL
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Net assets--October 1, 1996 $ 11,909,078 $187,736 $ 12,096,814
Loss on sale of properties -- (5,755 ) (5,755)
Net income from liquidating activities 297,859 25,901 323,760
Distributions (10,981,575) -- (10,981,575)
------------ --------- ------------
Net assets--December 31, 1996 1,225,362 207,882 1,433,244
Changes in estimated liquidation values of assets and
liabilities 3,966 (207,882 ) (203,916)
------------ --------- ------------
Net assets--December 31, 1997 $ 1,229,328 $ -- $ 1,229,328
------------ --------- ------------
------------ --------- ------------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
3
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF OPERATIONS
(going concern basis)
<TABLE>
<CAPTION>
Nine Months Year
Ended Ended
September 30, December 31,
1996 1995
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
REVENUES
Rental income $ 1,425,875 $1,945,915
Interest 14,596 18,210
Other 17,530 63,395
------------- ------------
1,458,001 2,027,520
------------- ------------
EXPENSES
Property operating 511,059 643,826
General and administrative 623,949 361,121
Real estate taxes 144,243 216,826
Loss on sale of land -- 32,112
Provision for loss on impairment of assets 300,000 900,000
Depreciation and amortization -- 590,644
------------- ------------
1,579,251 2,744,529
------------- ------------
Net loss $ (121,250) $ (717,009)
------------- ------------
------------- ------------
ALLOCATION OF NET LOSS
Unitholders $ (132,550) $ (766,241)
------------- ------------
------------- ------------
General partners $ 11,300 $ 49,232
------------- ------------
------------- ------------
Net loss per depositary unit $ (1.99) $ (11.51)
------------- ------------
------------- ------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(going concern basis)
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNERS TOTAL
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1994 $14,351,976 $204,942 $ 14,556,918
Net income (loss) (766,241 ) 49,232 (717,009)
Distributions (582,846 ) (50,629 ) (633,475)
------------ --------- ------------
Partners' capital--December 31, 1995 13,002,889 203,545 13,206,434
Net income (loss) (132,550 ) 11,300 (121,250)
Distributions (961,261 ) (27,109 ) (988,370)
------------ --------- ------------
Partners' capital--September 30, 1996 $11,909,078 $187,736 $ 12,096,814
------------ --------- ------------
------------ --------- ------------
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
4
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF CASH FLOWS
(going concern basis)
<TABLE>
<CAPTION>
Nine Months Year
Ended Ended
September 30, December 31,
1996 1995
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Rental income and deposits received $ 1,429,223 $1,952,196
Interest received 14,596 18,210
Other income received 17,530 63,395
Property operating expenses paid (499,540) (596,941)
Real estate taxes paid (138,605) (229,121)
General and administrative expenses paid (425,061) (254,857)
------------- ------------
Net cash provided by operating activities 398,143 952,882
CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from sale of land -- 678,072
Property improvements (146,597) (136,241)
------------- ------------
Net cash provided by (used in) investing activities (146,597) 541,831
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid to partners (988,370) (633,475)
------------- ------------
Net increase (decrease) in cash and cash equivalents (736,824) 861,238
Cash and cash equivalents at beginning of period 1,450,040 588,802
------------- ------------
Cash and cash equivalents at end of period $ 713,216 $1,450,040
------------- ------------
------------- ------------
- ----------------------------------------------------------------------------------------------------
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net loss $ (121,250) $ (717,009)
------------- ------------
Adjustments to reconcile net loss to net cash provided by
operating activities:
Provision for loss on impairment of assets 300,000 900,000
Loss on sale of land -- 32,112
Depreciation and amortization -- 590,644
Changes in:
Other assets (14,762) 19,000
Accounts payable and accrued expenses 245,982 76,159
Due to affiliates, net (35,575) 76,990
Accrued real estate taxes 5,638 (12,295)
Unearned rental income 5,897 (10,928)
Deposits due to tenants 12,213 (1,791)
------------- ------------
Total adjustments 519,393 1,669,891
------------- ------------
Net cash provided by operating activities $ 398,143 $ 952,882
------------- ------------
------------- ------------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
5
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
A. General
Prudential-Bache/Watson & Taylor, Ltd.-4 (the 'Partnership') is a Texas
limited partnership formed on October 11, 1985 which will terminate in
accordance with a vote of the Unitholders as described below. The Partnership
was formed for the purpose of acquiring, developing, owning and operating
business centers, retail shopping centers, mini-storage facilities and other
similar commercial real estate and investing in unimproved commercial
properties. The general partners of the Partnership are Prudential-Bache
Properties, Inc. ('PBP'), a wholly owned subsidiary of Prudential Securities
Group Inc., George S. Watson, and A. Starke Taylor, III (collectively, the
'General Partners'). PBP is the Managing General Partner and is responsible for
the day-to-day operations of the Partnership and its investments.
On December 15, 1995, the Management Committee of the Partnership determined
to seek bids for all the properties held by the Partnership. On June 13, 1996,
the Partnership entered into a contract with Public Storage, Inc., the property
manager of the Partnership's properties, for the sale of substantially all the
Partnership's properties. This sale was subject to the approval by the
Unitholders holding a majority of the depositary units and certain other
conditions and potential price adjustments.
In accordance with a consent statement dated September 17, 1996 (the 'Consent
Statement'), the Unitholders approved, on October 18, 1996, the sale to Public
Storage, Inc. of all five miniwarehouse facilities and four of the six
undeveloped land parcels owned by the Partnership and the liquidation and
dissolution of the Partnership. The five miniwarehouse facilities and three of
the four undeveloped land parcels which were under contract were sold to Public
Storage, Inc. and its affiliates on November 13, 1996. The Partnership received,
in cash, gross sales proceeds of $12,030,000 reduced by certain selling expenses
and pro rations of approximately $440,000. The gross sales price was in excess
of the appraised value of the properties. The fourth land parcel, Yancy Camp was
sold to Public Storage, Inc. on December 19, 1996. The Partnership received in
cash, gross sales proceeds of $175,000 reduced by certain selling expenses and
pro rations of approximately $7,000. The fifth land parcel, Dimension, a
one-half acre of land, was sold for $5,000 to a third party on November 22,
1996. The Partnership continues to own the remaining undeveloped land parcel,
Beltline Central, located in Addison, Texas. Based upon comparable land sales in
the area, the Partnership had adjusted the carrying value of the property to
$300,000 in the third quarter 1997.
A distribution of $165 per depositary unit was made on November 26, 1996
representing substantially all of the net sales proceeds reduced by a
contingency reserve and funds required to meet the anticipated current and
future operating costs until the liquidation of the Partnership. Estimated costs
expected to be incurred through the date of liquidation of the Partnership have
been accrued in the accompanying financial statements. See Note G to the
financial statements.
Net assets at December 31, 1997 have been adjusted to properly reflect the
allocation of limited partners' and General Partners' capital in anticipation of
the liquidation of the Partnership.
B. Summary of Significant Accounting Policies
Basis of accounting
The Partnership adopted the liquidation basis of accounting effective October
1, 1996. Accordingly, the net assets of the Partnership at December 31, 1996 and
December 31, 1997 are stated at liquidation value, i.e., the assets have been
valued at their estimated net realizable values and the liabilities include
estimated amounts to be incurred through the date of liquidation of the
Partnership. The actual remaining net proceeds from liquidation will depend upon
a variety of factors and are likely to differ from the estimated amounts
reflected in the accompanying financial statements. Prior to October 1, 1996,
the books and records of the Partnership were maintained on a going-concern
accrual basis of accounting. The Partnership's fiscal year for both book and tax
purposes ends on December 31.
6
<PAGE>
Property
Effective December 31, 1995, the Partnership reclassified its properties from
held for use to held for sale and ceased depreciating the properties for
financial reporting purposes only. Properties held for sale are recorded at the
lower of carrying amount or estimated fair value less costs to sell. In
connection therewith, the Partnership recorded an allowance for loss on
impairment of assets of $900,000 in 1995, $300,000 in 1996 and $125,000 in 1997.
Income taxes
The Partnership is not required to provide for, or pay, any Federal or state
income taxes. Income tax attributes that arise from its operations are passed
directly to the individual partners. The Partnership may be subject to other
state and local taxes in jurisdictions in which it operates.
Profit and loss allocations and distributions
Net operating income before depreciation is allocated and cash from
operations is distributed 92% to the Unitholders and 8% to the General Partners.
Net operating loss, provisions for loss on impairment of assets, and
depreciation are allocated 99% to the Unitholders and 1% to the General
Partners.
Loss from a Terminating Sale, as defined in the Partnership Agreement, is
allocated generally first to the General Partners to the extent of their
positive capital account balances, and then to the Unitholders until their
capital accounts are reduced to zero. However, the minimum allocation to the
General Partners of loss from a Terminating Sale shall not be less than 1%.
Sales proceeds from a Terminating Sale are first used for the payment of any
debts or obligations of the Partnership, then any balance remaining is
distributed to the partners having positive capital account balances.
C. Property Held for Sale
The Partnership's property as of December 31, 1997 and 1996 consisted of
Beltline Central, an undeveloped land parcel located in Addison, Texas. Based
upon comparable land sales in the area, the Partnership has adjusted the
carrying value of this property to $300,000 as of December 31, 1997 from
$425,000 as of December 31, 1996.
D. Net Income From Liquidating Activities
Net income from liquidating activities for the three months ended December
31, 1996 consisted of:
<TABLE>
<S> <C>
Rental and other income $ 352,448
---------
Property operating expenses 128,867
General and administrative expenses (326,179)
Estimated liquidation expenses 226,000
---------
28,688
---------
Net income from liquidating activities $ 323,760
---------
---------
</TABLE>
The credit balance for general and administrative expenses resulted from the
reclassification in the three months ended December 31, 1996 of certain Consent
Statement costs which arose in the nine months ended September 30, 1996. These
consent costs were reclassified as an increase to the loss on sale of the
property during the three months ended December 31, 1996.
E. Related Parties
PBP and its affiliates perform services for the Partnership which include,
but are not limited to: accounting and financial management, transfer and
assignment functions, asset management (including direct management of the
Partnership's unimproved property), investor communications, printing and other
administrative services. PBP and its affiliates receive reimbursements for costs
incurred in connection with these services, the amount of which is limited by
the provisions of the Partnership Agreement. The costs and expenses incurred on
behalf of the Partnership which are reimbursable to PBP and its affiliates for
the years ended December 31, 1997, 1996 and 1995 were $18,000, $129,000 and
$131,000, respectively.
Affiliates of Messrs. Watson and Taylor, the individual General Partners,
also perform certain administrative and monitoring functions on behalf of the
Partnership. Costs incurred in 1996 and 1995 were $41,000 and $29,000,
respectively.
7
<PAGE>
<PAGE>
In conjunction with the liquidation basis of accounting, the Partnership has
recorded an accrual as of December 31, 1997 for the estimated costs expected to
be incurred to liquidate the Partnership. Included in these estimated
liquidation costs is $75,000 expected to be payable to the General Partners and
their affiliates during the anticipated remaining liquidation period. The actual
charges to be incurred by the Partnership will depend primarily upon the length
of time required to liquidate the Partnership's remaining net assets, and may
differ from the amounts accrued as of December 31, 1997.
Prudential Securities Incorporated ('PSI'), an affiliate of PBP, owns 391
depositary units at December 31, 1997.
F. Income Taxes
The following is a reconciliation of net income (loss) for financial
reporting purposes to net income (loss) for tax reporting purposes:
<TABLE>
<CAPTION>
For the year ended December 31
-------------------------------------------
<S> <C> <C> <C>
1997 1996 1995
------------ ------------ ---------
Net income (loss) per financial statements $ (203,916)(a) $ 196,755(b) $(717,009)
Tax loss on sale of property in excess of book amount -- (11,212,578) (205,854)
Estimated liquidation costs, deducted for books not tax 21,192 226,000 --
Estimated liquidation costs, deducted for tax not book (114,231) -- --
Provision for loss on impairment of assets 125,000 300,000 900,000
Rent received in advance, net of reversal of prior year
amount -- (6,847) (10,928)
Carrying costs on land held for investment, capitalized
for tax -- -- 110,803
Other amounts deductible for tax -- -- (15,047)
Tax depreciation and amortization (in excess of) less
than book amounts -- (537,814) 7,037
------------ ------------ ---------
Tax basis net income (loss) $ (171,955) $(11,034,484) $ 69,002
------------ ------------ ---------
------------ ------------ ---------
(a) Represents changes in estimated liquidation values of assets and liabilities which is reflected
in the Statement of Changes in Net Assets.
(b) Represents loss on sale of properties ($5,755) and net income from liquidating activities
($323,760) included in the Statement of Changes in Net Assets and net loss from operations
($121,250) which is reflected in the Statement of Operations.
</TABLE>
The differences between the tax basis and book basis of partners' capital are
primarily attributable to the cumulative effect of the book to tax income
adjustments and the initial charge to partner's capital of syndication costs,
for book purposes, when the Partnership was formed.
G. Subsequent Event
On March 25, 1998, the Partnership entered into an agreement to sell the
Beltline Central property to a third party buyer. The purchase
price for the property is approximately $390,000 less certain
closing costs. The sale is subject to certain contingencies, including
a thirty-day due diligence period for the buyer to evaluate the
property and complete a feasibility study, and the agreement may
be terminated in certain circumstances as defined in the agreement. There
can be no assurance as to when or whether a closing on the
property will occur.
After the consummation of the proposed sale of the Beltline Central
property, the Partnership will have sold all of its real
properties, in accordance with the plan of liquidation previously
approved by the Unitholders. The Partnership will review its
liabilities, set aside amounts needed to dissolve the Partnership's
liabilities and will then liquidate the Partnership as soon as practicable
thereafter.
8
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
In accordance with the Consent Statement dated September 17, 1996, the
Unitholders approved, on October 18, 1996, the sale to Public Storage, Inc. of
all five miniwarehouse facilities and four of the six undeveloped land parcels
owned by the Partnership and the liquidation and dissolution of the Partnership.
The five miniwarehouse facilities and three of the four undeveloped land parcels
which were under contract were sold to Public Storage, Inc. and its affiliates
on November 13, 1996. The Partnership received, in cash, gross sales proceeds of
$12,030,000 reduced by certain selling expenses and pro rations of approximately
$440,000. The gross sales price was in excess of the appraised value of the
properties. The fourth land parcel, Yancy Camp was sold to Public Storage, Inc.
on December 19, 1996. The Partnership received in cash, gross sales proceeds of
$175,000 reduced by certain selling expenses and pro rations of approximately
$7,000. The fifth land parcel, Dimension, was sold for $5,000 to a third party
on November 22, 1996. The Partnership continues to own the remaining undeveloped
land parcel, Beltline Central, located in Addison, Texas.
A distribution of $165 per depositary unit was made on November 26, 1996
representing substantially all of the net sales proceeds reduced by a
contingency reserve and funds required to meet current and future operating
costs until the liquidation of the Partnership. Estimated costs expected to be
incurred through the date of liquidation of the Partnership have been accrued in
the accompanying financial statements. On March 25, 1998, the Partnership
entered into an agreement to sell the Beltline Central property to
a third party buyer. See Note G to the financial statements.
Net assets at December 31, 1997 have been adjusted to properly reflect the
allocation of limited partners' and General Partners' capital in anticipation of
the liquidation of the Partnership.
Results of Operations
As a result of the Partnership adopting the liquidation basis of accounting
in accordance with generally accepted accounting principles as of October 1,
1996 and thus not reporting results of operations thereafter, and the sale of
substantially all of the properties in October 1996, there is no management
discussion comparing the corresponding 1997 and 1996 periods.
All significant fluctuations between 1995 and 1996 were due to comparing nine
months in 1996 on a going-concern basis to twelve months in 1995, the sale of
substantially all the Partnership's properties during 1996 and the accrual at
year-end 1996 of estimated costs relating to the liquidation of the Partnership.
9
<PAGE>
OTHER INFORMATION
The Partnership's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission is available to limited partners without charge upon written
request to:
Prudential-Bache/Watson & Taylor, Ltd.-4
P.O. Box 2016
Peck Slip Station
New York, New York 10272-2016
10
<PAGE>
Peck Slip Station BULK RATE
P.O. Box 2016 U.S. POSTAGE
New York, NY 10272 PAID
Automatic Mail
PBW&T486/171674
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for P-B Watson & Taylor Ltd 4
and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000780352
<NAME> P-B Watson & Taylor Ltd 4
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-1-1997
<PERIOD-END> Dec-31-1997
<PERIOD-TYPE> 12-Mos
<CASH> 1,100,303
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,100,303
<PP&E> 300,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,400,303
<CURRENT-LIABILITIES> 170,975
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,229,328
<TOTAL-LIABILITY-AND-EQUITY> 1,400,303
<SALES> 0
<TOTAL-REVENUES> 0<F1>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0<F1>
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0<F1>
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0
<FN>
<F1>Registrant adopted the liquidation basis of accounting on
October 1, 1996, and, accordingly, does not reflect operations
subsequent to October 1, 1996. See Note A to the financial
statements for further details.
</TABLE>
